People are living longer these days,
which is good news. But the flip side
is that there are more years in which people have a risk of serious health problems. If you or a loved one were struck
with a serious or chronic health condition
and needed assistance completing regular
daily activities, would you be able to foot
the bill? Unfortunately, many people seek
the assistance of Long Term Care (LTC)
insurance when they learn ordinary health
insurance and Medicare are not covering
these services and it is already too late.
Long Term Care refers to the many services beyond medical and nursing care used
by people who have disabilities or chronic
illnesses. People who require these services are not necessarily sick in the traditional sense. Instead, they are unable to perform basic activities of daily living, such as
dressing, bathing, eating, using the restroom, getting in and out of bed, and walking.
LTC insurance helps you pay for these
services, which can be very expensive.
Many of these services are not covered by
ordinary health insurance and/or Medicare, and Medicaid only pays for the
expenses once a person’s assets and savings are depleted. An LTC policy can also
ensure that you make your own choices
about the services you receive and where
you receive them.
Smart Business sought advice concerning Long Term Care insurance from Diana
Owens, account executive with JRG
Advisors, the management company for
ChamberChoice.
What are some of the misconceptions about
Long Term Care?
Long Term Care services are not always
needed for a lengthy period of time. A person may need care for only a few months
to recover from a surgery or illness. Also,
Long Term Care insurance is not a benefit
that only applies to the elderly. Age is not a
determining factor in needing this coverage. Approximately 40 percent of people
receiving LTC services in the U.S. are
between the ages of 18 and 64.
Approximately 40 percent of people
accessing Long Term Care services in the
U.S. are between 18 and 65 years old.
What are some of the costs/services that LTC
insurance covers?
LTC insurance typically covers:
- Help in your home with daily activities,
such as dressing, bathing, eating, etc. - Visiting nurses
- Assisted living services/residential services outside of your own home that
include meals, health monitoring and
assistance with daily activities - Adult day care
- Nursing home care
When is the right time to purchase LTC?
The best time to buy LTC insurance is
between the ages of 35 and 50 when there
are fewer restrictions and premiums are
more affordable. Many people do not think
about Long Term Care services or insurance until they approach their 70s and 80s
and their health begins to fail. By this time,
people may be too high of a risk for an
insurance carrier to cover them or, even if
they qualify, the premiums can be unaffordable. It is important to note that some LTC policies have restrictions on age and
health status.
Is LTC insurance a good fit for everyone?
Long Term Care insurance is an important benefit that should be seriously considered, particularly because people need
to stretch their retirement savings through
more years since we are living longer. A
person’s goal should be to protect his or
her assets and minimize dependence on
family members. It is wise to shop and
compare policies before making a final
decision to purchase LTC insurance.
When contemplating the decision
to purchase LTC insurance, people
should keep in mind that the national
average today for nursing home costs
is about $72,000 a year and the average stay is two and a half years. Most
people do not have enough money
saved to pay for these costs.
How are LTC insurance rates determined?
Long Term Care insurance rates are
determined by four factors: age, level of
benefits, duration of benefits and the
health rating the person applying receives.
A health rating can be preferred, standard
or sub-standard. There are many advantages for an employer offering LTC insurance as a benefit to employees, including
group discounts ranging from 10 to 25 percent, coverage available with limited or no
medical underwriting and coverage
extended to employees’ family members
including parents, grandparents and siblings.
Costs for LTC insurance vary, but a survey from the American Association for
Long Term Care says a 55-year-old considering a policy worth $110,000 over three
years could expect to pay $665 a year if
married or $1,075 if single.
DIANA OWENS is an account executive with JRG Advisors, the
management company for ChamberChoice. Reach her at (412)
456-7251 or [email protected].